NEW YORK (AP) -- Shares of Yum Brands rose nearly 3 percent Friday after a UBS analyst upgraded the parent company of KFC, Pizza Hut and Taco Bell, citing his belief that its sales and profitability in China would start to improve soon.
Analyst David Palmer raised his rating to "Buy" from "Neutral." He raised his price target to $80, from $73.
Yum Brands Inc., based in Louisville, Ky., has been reeling over reports in China late last year that its chicken suppliers were using unapproved levels of antibiotics. The company mounted a campaign to assure customers of the safety of its food but then its sale were hit again when a new strain of avian flu was reported around the beginning of April.
The reports were particularly devastating because the country has been a huge growth engine for Yum. The company is the biggest Western fast-food operator in China, thanks in large part to KFC.
In his note to investors, Palmer said his analysis of media coverage suggests that sales trends are set to recover as concerns over avian flu "quickly dissipate." Palmer also noted that the company is working to make its breakfast and extended hours more efficient, with new restaurant openings in the country slowing a bit.
Shares of Yum were up $2.05 at $73.17.